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Indian Trust Official, Ray Joseph, Exits Interior

Rob Capriccioso

1/18/12

WASHINGTON –

A high-ranking official focused on Indian affairs at the U.S. Department of the Interior who had raised multiple concerns about Interior’s management of trust funds left his position in December after less than a year on the job, Indian Country Today Media Network has learned. The official, Ray Joseph, had served as principal deputy special trustee (PDST) at the department’s Office of the Special Trustee (OST) for American Indians since January 2011. In that position, he was responsible for overseeing the financial management of Indian funds held in trust by the federal government “Principal Deputy Special Trustee Ray Joseph has decided to pursue other opportunities outside of the Department,” said Adam Fetcher, press secretary for the department. Fetcher would not say whether Joseph was encouraged to move on, and ICTMN has not been able to reach Joseph for comment.

A public memorandum issued December 8, 2011 by Interior’s Office of Inspector General (OIG) to David Hayes, deputy secretary of the department, offers some insight on the concerns raised by Joseph while he was at Interior. The memo states that Joseph had raised six internal control weaknesses involving the Office of Trust Fund Investments (OTFI), a component of the OST. His concerns, according to the memo, were that OST had insufficient internal controls to ensure that only authorized personnel initiated and approved investment transactions. In addition, he said that OST did not have sufficient internal controls because the office lacks an automated order-management system. The fact that the same investment contractor provided two distinct services was also a concern. He noted, too, that transactions from fiscal year 2010 did not identify the rating of the securities that had been traded, which did not comply with OST policies in place at that time.

The OIG apparently examined and then dismissed all of Joseph’s complaints: “The PDST’s feeling that internal controls over OTFI were insufficient was based on two investment errors that occurred during fiscal year (FY) 2011,” the memo states. “[We] found that the internal controls for initiating and approving transactions were adequate. The internal controls the PDST described as being insufficient without an order-management system were also sufficient.”

There were rumors in D.C. that there was an internal investigation involving Joseph. On January 9, ICTMN sent the following request to Interior’s Freedom of Information Act (FOIA) office: “I am writing to request a copy of an [OIG] report released in December 2011 involving Ray Joseph’s leadership at the Office of the Special Trustee.”

Two days later, ICTMN received this response: “Attached you will find the closing letter and responsive documents to your recent FOIA request with our office. One of the documents responsive to your request can be found at the following link: Doioig.gov/images/stories/reports/pdf/ZZ-EV-OST-0001-2012.pdf. The other two documents have been attached.… ”

One of the attached documents was an “investigative activity report” conducted by the OIG, dated December 15. It noted that an official with OST was requesting that a contracting officer “hurry a sole source contract.” The name of that OST official was blacked out.

According to the report, the contracting officer “said that the contract had no sole source justification and was for over $200,000 to a company out of New York, RV Kuhns,” for “contract development work.” According to the website of the company, R.V. Kuhns & Associates, Inc., the firm has provided “strategic investment consulting services to institutional investors” since 1985.

The memo says Ron Hunt, deputy director of budget, finance and administration at OST, called the money request “incredibly high” and unusual for the type of work involved. Hunt also stated that he’d heard there was a friendship between an employee at R.V. Kuhns and someone at OST.

The other OIG communication received by ICTMN via the FOIA request was written January 4 by Scott Culver, deputy assistant inspector general for investigations at Interior. In it, Culver asks that the referral involving R.V. Kuhns be closed as the subject was no longer at the Department of the Interior. This came soon after Joseph left the agency.

When hired in January 2011, Joseph was quoted in Trust Matters, an Interior trust-related publication, saying, “I am pleased to [be] a part of the OST team with employees who are proud of changes that already have been made to the accountability and management of the Indian trust, and who are passionate about the work they continue to do.” He said that under his leadership OST would focus on aligning its activities with other bureaus and offices in the department in order to fulfill directives outlined in the American Indian Trust Fund Management Reform Act of 1994.

Before taking on the OST leadership position, Joseph served as the acting chief investment officer for New Jersey’s Treasury Department. And before that, he held various treasury and investment roles for nearly 17 years.

Questions about Joseph’s leadership come at a poor time for Interior Department Secretary Ken Salazar, who has spent the past three years claiming that Indian trust matters are being cleaned up and managed properly.

Meanwhile, Interior is leading consultation sessions with tribal leaders on how it should carry out its duty to oversee a $1.9 billion land-consolidation program called for in the Cobell settlement. That settlement, still on appeal, has allowed Interior not to be forced to quantify the extent of its Indian trust mismanagement since the 1800s. The settlement would also grant great latitude to the very department that was responsible for so much mismanagement in developing the land buy-back plan if that ultimately makes it through appeal.

While the trust mismanagement questions linger, the Interior Department under Salazar has tried to present itself as a place where the old messes are being cleaned up, slowly but surely. The department, for instance, issued a press release in January 2011 saying that it had received its 14th consecutive “favorable audit opinion” from KPMG LLP, an independent certified public accounting firm and the department’s external auditor. The release indicated that the development represented the department’s “continuing commitment to sound financial management and success.” “Indian affairs” were included in the list of audited entities.

Dennis Gingold, the lead lawyer for the Indian plaintiffs in the Cobell settlement, found the audit “interesting,” since auditors involved with the Cobell case were unable in that litigation to render an opinion on the amount of money owed to Indian trust beneficiaries due to “material systemic deficiencies.”

A note on page 126 of the Department of Interior’s FY 2010 Agency Financial Report sheds light on the confusion, indicating “it was not practicable for the independent auditors to extend audit procedures sufficiently to satisfy themselves as to the fairness of the trust-fund balances.… Regarding the Individual Indian Monies Trust Funds, it was not practicable for the independent auditors to extend audit procedures sufficiently to satisfy themselves as to the fairness of the trust fund balances.… ”

In other words, a real audit of the Indian trust monies has never been done. Yet Salazar has been insisting that all is running smoothly. The questions raised by Joseph, and the question raised about Joseph’s conduct at Interior, suggest otherwise.

With the departure of Joseph, new questions are likely to rise in Indian country about the ability of the department to transparently and justly manage trust matters on behalf of American Indians.

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How do you account for monies in the Trust if an audit says they can't account for the monies that have been deposited??? From an early age, I questioned the Office of Special Trustee about how much money was in the "Individual Indian Money" account. I was sent to various different people - Neal McCaleb to Donna Irwin, at the OST and no one could tell me. I contacted my Senator at the time Senator Nichols of Oklahoma who sent me to House of Representatives Lucas who sent me to someone else... I think a lady in Tulsa named Fite... It was just a big cycle of people. None of these people could give me a straight answer. Why do they call it Individual Indian Money accounts if they can't tell the individual how much is in the Account??? They said it is getting monies from the Bureau of Mining, Bureau of Oil and Gas, Bureaus of Land Management, etc. Looks like they could take a daily tally from these different Bureaus or Departments and estimate from the day the accounts were opened to come to an estimate of how much is in there. I am not an accountant but I think I could come up with a ballpark figure.

There are many centuries old investigative reports why the federal problem in Indian Affairs (this is not an Indian problem) is the oldest and most messed up legal problem of all times. The U.S. likes it that way.
There is no “Indian” Trust policy that protects our land and money business. First, we need a policy that protects us from the federal government.
Second, we need a common law trust policy created by Congress, approved by the Courts and agreeable by Indian Country, until then, these kinds of problems will go on forever. If we need to sue the U.S. then it will be easier to win in Court instead of never ending Indian lawsuits forcing undesired settlements.
Third, the corrupt Indian agent syndrome is alive and well today as in the past. When placed on the government payroll you dance their broken trust dance or you are sent home. This Country knows well that if you want federal Indian trust not to work then hire the wrong people. This is an historical fact. OST is a prime example of dodging Indian Preference and hiring non-Indians. IP must be re-defined.
Fourth, Indian Trust business and administrative operations should never be contracted out. There are other bad federal policies to correct but to many to list for this article.
Indian Affairs should be a separate entity from the government for its own protection. Congress created the Dept of Commerce and Interior so they can create a Department of Indian Affairs.
After 15 years of OST trust reform, they still do not have policies and procedures in place to know the problems and how to resolve them. The U.S. District Court declared them in breach of their federal trust duties meaning since BIA was created in 1824 and DOI was created in 1849 and OST was created in 1994 they all failed to do their job. Just think of the multi-billions appropriated to break this Country’s treaty promises and U.S. Constitutional fiduciary trust to American Indians.
“But on March 28, (2003) well past the January deadline imposed by Lamberth, Swimmer's Office of Special Trustee released a "comprehensive" trust management plan that brings in common law standards. Well, sort of, said Lamberth. "It would take a magician to understand that," he observed.”
At this point, the broken trust is still not a complete trust and never was a trust from the beginning of Indian Affairs. So the U.S. can still administer its historical broken government trust, mismanage Indians’ own land and money, cannot be held accountable nor can they be prosecuted.
In sum, the Office of Special Trustee for American Indians received an estimated $1.5 billion and is a total waste of money. Judge Lamberth ordered the federal government to explain the federal trust to him and after days of testimony declared that their attempts was only an “appearance of trust”.
Thomas M. Wabnum
BIA/OST Budget Analyst, retired
IIMAccountholder@comcast.net